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President Barack Obama and Speaker of the House John Boehner addressed the nation Monday night on the status of the debt and deficit talks — but through the rhetoric, an outline of a deal has emerged.Their speeches didn’t change anything. While each undoubtedly helped the leaders with their respective party base, they did little to move Congress toward a plan to raise the debt ceiling. But what they didn’t say hints at a compromise just over the horizon.
Democrats and Republicans introduced rival plans to raise the federal borrowing limit and lower the deficit yesterday — with neither proposal likely to pass Congress in its current form.
After adopting a parental tone calling for an end to partisan bickering, the president oddly spent much of his speech plugging his “grand bargain” proposal that is functionally dead. But he did not threaten to veto a bill that wasn’t balanced with revenues— or even one that fails to raise the debt limit through the end of 2012.
“America, after all, has always been a grand experiment in compromise,” Obama said, urging Americans to contact their representatives and ask them to embrace the principle. The House of Representatives servers crashed last night.
Speaker after the president, Boehner declared the negotiating period — and the time for compromise — over. But he left the door open for just that.
“There is no stalemate in Congress,” he said, using the opportunity to criticise the Democratic plan tor raising the debt limit. “The House has passed a bill to raise the debt limit with bipartisan support. And this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks.”
But the proposals he and Senate Majority Leader Harry Reid have introduced are not all that far apart — the Reid plan, which has the support of S&P raters, even cuts more spending immediately. They share the same name, the “Budget Control Act of 2011,” and are in lockstep on a spending target for the next fiscal year.
The Reid plan counts about $1 trillion in savings from the wars in Iraq and Afghanistan to reach it’s $2.7 trillion in cuts — the Boehner plan would cut $1 trillion immediately. Both plans would create a bipartisan fiscal commission to further reduce the deficit next year.
House Majority Leader Eric Cantor, one of the most outspoken critics of congressional Democrats, admitted Monday night that the major sticking point between the two plans is whether there should be a second vote to raise the debt limit early next year. The Boehner plan also calls for a balanced budget amendment vote by the end of the year.
These problems are easily surmountable, and the basic outline of a compromise solution seems obvious to all. Boehner agrees to the initial Reid cuts, perhaps with some additional sweeteners for the Republican base.
Reid and Obama would get their debt limit increase through the end of 2012, while the deficit cuts proposed by the congressional commission would be incentivized by some sort of mutually agreed upon penalties. Perhaps they would even agree to vote on a balanced budget amendment, which is certain to fail in the Democratic-controlled Senate.
Such a compromise is necessary, as House Republicans are not enthralled by either the Boehner or Reid plans — meaning a significant number of Democrats are required to pass anything. It would also go a long way to preventing a catastrophic downgrade of U.S. debt.
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